Anadarko Beats Out Hunt for Berkley Petroleum
Just days after Houston-based Anadarko said it would boost its
spending in Canada this year (see NGI, Feb. 12), the independent
played white knight last week, agreeing to acquire gas-rich Berkley
Petroleum Corp. for $777 million, further boosting its Canadian
reserves and pulling the rug out from under another Texas-based
producer that had set its sights on the company two months ago.
The deal, which has already been unanimously approved by both
directors' boards, would pay Berkley shareholders the equivalent of
C$11.40 per share in cash. Anadarko also would assume about $250
million in Berkley debt. Anadarko's offer exceeded by about 10% a
competing takeover bid by Dallas-based Hunt Oil Co. made Feb. 5.
Berkley's board recommended that shareholders approve the deal.
For the bridesmaid Hunt, a subsidiary of Hunt Consolidated Inc.,
the accepted Anadarko offer squashed a three-month long plan to
boost its Canadian reserves by adding Berkley, which began in
December. The bid was knocked back by Berkley, which called the
initial offer too low and, among other things, opened its data
rooms in January in an effort to lure other buyers and then
unanimously rejected Hunt's offer (see NGI, Jan. 22). Hunt owns
about 10% of Berkley's stock; the bid by Anadarko requires that
66.67% of the shares of Berkley be tendered.
Berkley's assets stretch from Western Canada to California; its
Canadian assets would become part of Anadarko's existing Canadian
company, Anadarko Canada Corp., headquartered in Calgary. Berkley's
exploration and production focuses on properties situated near
existing Anadarko properties in the Western Canadian Sedimentary
Basin in Alberta, northeastern British Columbia, the Northwest
Territories and southeastern Saskatchewan.
Anadarko estimates that Berkley holds 95 MM boe of net proved
reserves (after royalties), of which 70% is natural gas. Current
average daily net production is 10,900 bbl and 116 MMcf of natural
gas (14,500 bbl and 155 MMcf/d on a working interest basis).
Berkley has 140 total employees, which Anadarko expects to keep.
Anadarko did not detail how Berkley's properties outside of Canada
will fit into its business, and said those plans will be announced
in the future.
Although smaller in size, the Berkley acquisition would be the
second into Canada for Anadarko in less than a year. Anadarko bought
Union Pacific Resources last year for about $4.4 billion in stock (see
NGI, April 10, 2000). The UPR deal made
Anadarko the sixth largest natural gas producer in North America and
gave it the fifth largest natural gas reserves. Counting Berkley's
acreage, Anadarko would hold 4.7 million acres net (3.5 million
undeveloped net, 1.2 million developed net) in Canada in all of the
major Canadian exploration gas plays, particularly in northeastern
British Columbia, the Alberta foothills, the Northwest Territories,
the Scotian Shelf and the Mackenzie Delta.
Anadarko CEO Robert J. Allison called the Berkley acquisition a
"great deal. It fast tracks growth of our Canadian natural gas
business. In addition to being a good fit with our existing
strategy, the deal meets our basic criteria because it is accretive
to earnings, cash flow and growth."
Jim Emme, the Anadarko Canada Corp. president, said, "both
companies have a common vision to grow through exploration. Our
plays and acreage are complementary." He said that since the merger
with UPR, Anadarko had implemented plans to grow its Canadian gas
reserves. "This deal accelerates our long-term strategy by at least
Anadarko said it would mail its offer by this Friday (Feb. 23),
which would remain open for 21 days from the date of mailing.
Berkley has agreed to discontinue its efforts to seek and consider
strategic alternatives, to close its data rooms, not solicit other
proposals and to provide Anadarko the right to match competing
offers. In certain circumstances, if Anadarko's offer is not
completed, Berkley has agreed to pay a break fee of C$48 million to
Carolyn Davis, Houston